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R.M. Jassawala Vs. Amulya Chandra Dutta - Court Judgment

LegalCrystal Citation
SubjectCivil
CourtAllahabad
Decided On
Reported inAIR1940All494
AppellantR.M. Jassawala
RespondentAmulya Chandra Dutta
Excerpt:
.....of a 'proof' then, it would seem that the appellant is now precluded for ever from executing his decree. ' 9. i think that this view of the matter conforms to the obvious intention of section 78. it would be a manifest injustice that, in a case in which a creditor has done all that he can do, he should be deprived of the benefit of section 78 because the court has failed in its duty of 'admitting or rejecting' his proof. 11. for the reasons which i have given, i prefer the view taken in 1929 by the calcutta high court and i hold that the word 'proved' in the proviso to section 78, provincial insolvency act, is in relation to a provable debt, satisfied when to use the words of section 49 a proper 'affidavit verifying' it has been delivered or sent by post in a registered letter to the..........it is necessary, i think to consider those sections of the act which relate to the mode of proof of debts. by section 33(1) of the act, all persons who allege themselves to be creditors are required to 'tender proof' of their debts by producing evidence of them and the court must 'by order determine' whether they have 'proved themselves to be creditors...' or not and frame a schedule accordingly. it is curious to notice the variety of expression used. the creditor is said to 'tender proof' of his debt by adducing evidence of it and when they have successfully done so they are said to have 'proved themselves to be creditors.' it seems to me that in their context in section 33 the words 'proof' and 'proved' are used in their ordinary sense under the evidence act and not in any.....
Judgment:

Braund, J.

1. The facts of this second appeal are very simple, but they give rise to a nice point of construction of the proviso to Section 78, Provincial Insolvency Act. On 2nd April 1931, the appellant obtained a decree for three thousand rupees odd against the respondent. On 14th May 1931, the respondent filed an insolvency petition under the Provincial Insolvency Act and on 14th August 1931, an order of adjudication was made against him. Almost four years then elapsed and on 5th July 1935 an application was made to the Court for amendment of the adjudication under Section 35 of the Act. On 11th July the appellant, by his agent, submitted a proof of his debt under the decree but the only step the Court took was to give the appellant until 22nd July to file the power of attorney under which his agent had sworn the affidavit in support of the proof. On or before 22nd July, this power of attorney was duly lodged in Court and an order was made by the Court to the effect that the 'proof' should be 'filed' and sent to the Official Receiver. On 4th September, the Official Receiver reported to the Court that the debt was due and that the appellant's name might be entered in the schedule. On 25th September-three days later-an order was made annulling the adjudication order.

2. In March 1937, the appellant applied in his original suit to execute his decree for Rs. 3000 and was met with the objection that his debt was one which was 'provable but' had not been 'proved' in the insolvency and that, accordingly, by virtue of the proviso to Section 78 of the Act, he was not entitled to the benefit of Sub-section (2) of the same section in respect of it. The point is a short, but neat, one of pure construction. It turns entirely on the meaning of the word 'proved' contained in the proviso. If that word is satisfied by what the appellant had done-namely to lodge his 'proof' in Court-then he is certainly entitled to the benefit of this Section. If, on the other band, the word 'proved' can only be satisfied by the formal acceptance of a 'proof' then, it would seem that the appellant is now precluded for ever from executing his decree.

3. I do not overlook that it must be admitted that in this particular case the appellant waited nearly four years after the adjudication order was made before lodging his proof and that, when he eventually did so, it was within six days after the application for annulment had been filed. I cannot escape the conclusion that it was only when the annulment application was filed that the appellant woke up to the fact that unless he lodged his proof he might be precluded from ever taking advantage of his decree. I am quite alive to this. But, in my judgment, any dilatoriness on the part of the appellant cannot in any way affect this question which is one of pure construction of the Act. The construction of the Act cannot, in any way, be affected by what the appellant has, or has not, done.

4. Before going any further, it is necessary, I think to consider those sections of the Act which relate to the mode of proof of debts. By Section 33(1) of the Act, all persons who allege themselves to be creditors are required to 'tender proof' of their debts by producing evidence of them and the Court must 'by order determine' whether they have 'proved themselves to be creditors...' or not and frame a schedule accordingly. It is curious to notice the variety of expression used. The creditor is said to 'tender proof' of his debt by adducing evidence of it and when they have successfully done so they are said to have 'proved themselves to be creditors.' It seems to me that in their context in Section 33 the words 'proof' and 'proved' are used in their ordinary sense under the Evidence Act and not in any technical sense under the insolvency law. It has to be noticed too that in this sense, the final stage in the process of creditors being proved to be creditors is that an order of the Court shall be made to that effect.

5. We turn now to Sections 45, 47 and 48 of the Act. Here we find the expression 'prove for a debt' and 'state in his proof.' Now, this strikes me as a use of the words 'prove' and 'proof' in quite a different sense from the ordinary sense in which those expressions are used in the Evidence Act and in Section 33, Provincial Insolvency Act. These words are used in Sections 45, 47 and 48 respectively, I think, to denote that technical process by which a creditor in the administration of an insolvent estate is to establish his debt. To 'prove for' a debt is to take those steps which are required by the Act to be taken to establish the debt; and the 'proof' itself is that document or series of documents which constitute under the Act, the claim itself. It seems to me, as I have said, that these words in this context have a technical meaning-beyond their ordinary meaning under the Evidence Act-and are used to denote those special processes which are peculiar to insolvency.

6. Section 49 is an important section. It is a section which indicates how a debt may be 'proved.' It may be 'proved' by sending an affidavit to the Court to verify it. Here again I think the word 'proved' is being used in a technical sense. It is, I think, the step of sending the affidavit to the Court that constitutes the act of 'proving' and it is the document which is sent, which is, in insolvency language, the 'proof.' The act of accepting or rejecting the 'proof' is quite a different thing. This is made clear, I think, when one looks at Section 80(1), Provincial Insolvency Act. That section refers in sub-s (b) to a power 'to frame schedules and to admit or reject proofs of creditors.' There are, as it seems to me, two distinct stages-first, the'proof,' i.e., the submission of the evidence, and, secondly, the admission or rejection of that 'proof.' I think that, in order to follow the Act closely, one has to keep firmly in mind that the words 'prove' and 'proof' are used in it in two quite distinct senses-in one place in the ordinary sense in which they are used in relation to evidence under the Evidence Act and in another place in a technical insolvency sense.

7. No direction has ever been given by the Court to Official Receivers under Section 80 of the Act giving them power 'to frame schedules and to admit or reject proofs of creditors.' It follows therefore that Section 33 applies and that the Court alone could 'by order determine the persons who have proved themselves to be creditors.' There was no order of the Court to that effect in this case. All that the Court did wrongly, I think, was to order the 'proof' to be filed and reported on. It was never followed by an order. The question therefore really is whether, notwithstanding that there was no order under Section 33(L) of the Act determining that the appellant had proved himself to be a creditor in respect of his decree, his debt can be said to be one which had been 'proved under this Act' for the purposes of the proviso to Section 78.

8. The question is not altogether easy and it does not appear to have arisen before in this Court. In the oases in which it has arisen in other High Courts, there is a slight conflict of opinion. In my judgment, the preferable view is that the word 'proved' in the proviso to Section 78 is used, not in its ordinary sense under the Evidence Act, but in its technical insolvency sense and that, for the purpose of this proviso, a debt is 'proved' when those steps in respect of it which are prescribed by Section 49(1) have been taken. I say again that it is, in my view, extremely important in construing the Act in this respect to bear in mind the two senses in which the words are used. In the insolvency sense a 'proof' is the claim supported by evidence which is lodged and the verb to 'prove' is I think to 'lodge a 'proof.' '

9. I think that this view of the matter conforms to the obvious intention of Section 78. It would be a manifest injustice that, in a case in which a creditor has done all that he can do, he should be deprived of the benefit of Section 78 because the Court has failed in its duty of 'admitting or rejecting' his proof. I agree that in the present case the appellant delayed his 'proof until the last minute and that therefore he does not perhaps, deserve great sympathy. But that is not, in my opinion, a consideration which can affect the true construction of the Act.

10. The authorities conflict. In Rali Ram v. Sant Ram Ganpat Rai (33) 20 AIR 1933 Lah 101, a learned Judge of that Court adopts the view which I myself prefer and that view has also been adopted by Sir Owen Beasley in the Madras case in Lakshmi Bai v. Rukmaji Rao : AIR1934Mad465 . In the Calcutta High Court also, Sir George Rankin and another Judge, in an earlier case were of the opinion that the expression 'a creditor who has proved his debt' means a creditor who has lodged the necessary proof and that the question is one which is entirely independent of whether that proof has been rejected or accepted. It is true that this case arose under the Presidency Towns Insolvency Act, but that is immaterial: see Sailendra Krishna v. Rashmohan Saha : AIR1929Cal703 , On the other hand, there is a two-Judge-case of the Lahore High Court, Walaiti Ram v. Partab Singh (32) 19 AIR 1932 Lah 173, which takes the opposite view, that a formal order allowing a proof is necessary before a debt can be said to have been 'proved' for the purposes of the provision to Section 78, Provincial Insolvency Act.

11. For the reasons which I have given, I prefer the view taken in 1929 by the Calcutta High Court and I hold that the word 'proved' in the proviso to Section 78, Provincial Insolvency Act, is in relation to a provable debt, satisfied when to use the words of Section 49 a proper 'affidavit verifying' it has been delivered or sent by post in a registered letter to the Court. In the case before me, the appellant's debt was 'proved' on 22nd July 1935 and accordingly he is entitled to the benefit of Section 78(2) of the Act. The only other question which remains to be determined in this appeal is whether, under the amended Section 51, Civil P.C., the judgment-debtor is liable to be arrested and detained in a civil prison in execution of the decree. This depends upon the answer to the further question whether he can be shown to have either transferred property, or to have concealed it, in order to avoid paying the amount of the decree.

12. This is, I think, a pure question of fact. The burden lies upon a judgment-creditor who asks for this type of execution to show that the necessary circumstances exist to justify it. And the learned Additional Civil Judge has found in this case that they do not. I do not think that it is open to me to go behind that in a second appeal. But even if it had been, I should have agreed with him. At its very highest all that has been shown by the evidence is that he may be interested in a hotel at Agra and another at Delhi and another at Muttra. Even if he owned these hotels, then, without some information as to their value and the value of the business they constitute, it would not constitute evidence that he had or ever has had, any available resources out of which he could have satisfied this decree in whole or in part. For, it does not follow that the possession of an hotel is an 'asset' at all. It may well be a liability. At least, it would have had to be shown that some value attached to the ownership of these hotels, even supposing that the judgment-debtor's ownership of them were admitted. For these reasons, I think that the learned Civil Judge was right, on the facts before him, in declining to allow execution of the decree by the debtor's arrest and detention.

13. In the result therefore this appeal will be dismissed. The judgment-debtor is entitled to his costs in both the lower Courts and I so order. But as regards the costs of the appeal in this Court, by far the greater part of the argument has turned on the judgment-debtor's contention under Section 78 of the Act, upon which contention I have felt obliged to decide against him. There will, therefore, be no order for costs in this Court. The Munsif of Agra in the first Court, for some reason which I do not wholly understand, did not determine whether, so far as the appellant's application was an application for execution against the judgment-debtor's property as opposed to his persons, he was entitled to attach that property. I shall, therefore, now remit the proceedings back to the Court of the Munsif for that question to be determined, assuming, of course, that the decree-holder desires to press it. The point is a novel point, and has not been the subject of any previous decision in this Court. I will, therefore, grant liberty to appeal under the Letters Patent.


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